New Yorker by birth & attitude, I live in Europe, where I am a Professor at IMD, in Lausanne, Switzerland, and where I co-direct the IMD/MIT-Sloan "Driving Strategic Innovation" program; and have had a long-time love affair with China, where we first moved our family to China in 1980, and where later I was the Executive President & Dean of CEIBS (the China-European International Business School) in Shanghai (1997-1999). I've recently co-authored (with Umberto Lago & Fang Liu) "Reinventing Giants" (2013) and (with Andy Boynton): "The Idea Hunter" (2011) and "Virtuoso Teams" (2005).

Innovation: Corporate Culture is Not the Answer!

In fact, I can’t remember when any organization last came to IMD and pronounced themselves as being innovation indifferent; yet, the sad truth is that while everyone dreams of becoming Apple, most linger in the same innovation-lite purgatories that we associate with today’s RIM, Kodak, even Sony, and countless other organizations who despite their best efforts and historical legacy are no longer distinguished by the successful commercialization of great ideas. Clearly, such organizations are not the victims of aspirational failure; they all aspire to be innovative! The problem must be somewhere else; perhaps their organizational culture?

A new report on innovation produced by Booz & Company — Global Innovation 1000 — which is forthcoming in the Winter 2011 edition of Strategy + Culture argues that organizational culture is, indeed, the culprit. The report observes that “only about half of all companies say that their corporate culture ["the organization's self-sustaining patterns of behaving, feeling, thinking and believing"] robustly supports their innovation strategy. Moreover, about the same proportion say their innovation strategy is inadequately aligned with their overall corporate strategy.”

In fact, the report’s observation on the lack of a statistically significant relationship between financial performance and innovation spending serves to further emphasize that innovative success is not a function of spending-might, but rather of the environment in which any such investment takes place.

What we are told by the new Global Innovation 1000 study is that “intangibles, such as risk, creativity, openness, and collaboration — are critical for [innovation] success.” I think that we would all agree, but, here’s the rub: these are all outcomes, they are all aspirations in their own right: “we want to be less risk-adverse, we want to be customer-centric, we want to move to market faster, etc., etc.”, I hear these nearly every day, and yet nothing changes. Wishing about changes in corporate culture is not enough! In fact, a friend of mine, who is quite well-known in innovation circles, has often remarked that “the word culture is an excuse for not thinking!” What we really want to focus-in-on are the leadership acts and managerial choices that will raise the probability of us actually achieving one or more of these aspirations!

Every organizational manager, no matter how modest the organization, can make a difference in how innovative their organization can be. It all starts, as Global Innovation 1000 rightly points out, with a precise and inspiring vision of the role that innovation will play in the organization’s vision of strategic success. Global Innovation 1000 cites HP’s Prith Banerjee, SVP of Research and Director of HP Labs, who provides a good example of this. He reveals a fourfold mission for the HP Labs business unit:

Creating absolutely breakthrough technologies

Creating new business opportunities for HP

Advancing the state of the art in whatever we do; and

Engaging with customers and partners.

These provide a crisp, and relatively unambiguous vision of what this particular business unit aspires to achieve. However, the conversation must not stop here! What must come next is a recognition of discrete and concrete managerial choices that will raise the probability of HP Labs (in this example) achieving these aspirations. Without such choices, we have only dreams!

At IMD, we have come to rely upon a simple, but exceedingly useful framework for thinking about the managerial choices necessary to really build an aspirational culture, that was developed by a former IMD colleague, Jay Galbraith. Galbraith’s “star model” (which is portrayed above for IDEO’s highly innovative culture (my interpretation)) identifies the five “levers” by which managers can move an organization:

the articulation of strategic vision (which should be both precise & liberating)

the talent & skills that are necessary to achieve this vision

the best way to organize our talent & skills to achieve our vision

the processes that we can employ to give our talent a higher probability of success, and

the values, measures & rewards by which we inspire, evaluate and compensate our talent.

If you read carefully through the Global Innovation 1000 report, what you will see are signs that the most successful innovators mentioned are [as HP Labs, in fact, appears to be doing] making such specific managerial choices, that they are doing it in such a fashion that each choice directly supports the aspirational vision that has been announced, and that each choice reinforces every other choice. There are no disconnects allowed! Conflicting choices will only slow you down and create confusion. Finally, successful innovators synchronize the timing of their choices to the extent possible in order not to entertain disconnects caused by the sequential timing of the managerial choices, which can be as disconcerting as not making reinforcing choices.

Wishing for a more innovative culture is not the answer. To begin with, the terms “innovation” and “culture” mean so many things, to so many people, that if we stop there we have no idea what anyone understands. Instead, an innovative culture should be recognized as being painstakingly crafted from the aggregation of many different discrete managerial choices, all of which are aimed at the overall strategic vision, and all of which are reinforcing. Successful innovation leaders cannot allow strategic conversations to stop at the aspirational level. They must insist on drilling down to the next level of managerial choices that are necessary to gain the desired outcome. In fact, I would personally ban the use of the word culture as being too mysterious for effective conversation. Let’s, instead, begin with the outcomes we wish to achieve, understand the business-model reasons why we wish for these outcomes, and then focus on the choices that will get us there. __________________________________________ Bill Fischer’s latest book is The Idea Hunter (co-authored with Andy Boynton) (Jossey-Bass, 2011). Bill Fischer can be followed on Twitter @bill_fischer

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Most executives and managers can only dream of having a workforce of highly creative, highly innovative, highly motivated, committed, fully engaged employees having high morale and literally loving to come to work.

But actually, their dream is quite easy to achieve if they could turn away from the autocratic and bureaucratic approach to one of autonomy and support.

Yes, the mortal enemies of innovation and all the other great things people are capable of providing to any company are autocracy and bureaucracy. These two demotivate and demoralize employees.

But almost all employees can be led to being highly innovative, highly motivated and highly committed. The first step is to understand what leadership actually is. http://www.youtube.com/watch?v=rlWoF1etFP4

The second step is to understand what motivates us. This was revealed by the research of psychologists Edward Deci and Richard Ryan. http://www.youtube.com/watch?v=u6XAPnuFjJc

Hello Ben, I agree with your sentiments. Most of us do not have the luxury of selecting our employees; instead, all too often we inherit the choices of others. This is not necessarily bad, it merely means that we have to inspire people who might not have “signed-up”for the challenge at hand. I also agree, however, that most people initially come to work with enthusiasm and energy, only to see that disappear as a result of the way that complex organizations treat them. Like you, I believe that we should encourage everyone to think of themselves as an “innovator”and the key to doing this can only be found in leadership. Thanks for your comment. Bill

What a provocative comment, that culture is not the answer to driving innovation. We’d agree that innovation and culture do not have commonly shared definition or meaning. Funny that as a result you propose banning the word culture, but not innovation. Given what’s a stake for companies today, it seems more useful to educate leaders on how to define (and change) culture simply and specifically: What we do that helps or hinders our strategy. In our book, Transforming Corporate Culture: 9 Truths for Being Fit to Compete, we have sought to do this – to simplify and de-mystify the fuzzy concept of culture. As you point out, the answer is what can leaders and managers do (behaviorally) to drive collective alignment – and thus speed – toward the mission and goals of the business. That’s culture. One simple example is how decision rights change in a culture to align with faster and better innovation – for example, in a culture seeking more innovation (for what purpose?) decision rights must be revisited from that of a traditional hierarchy or matrix environment. Decision making must be increased among teams and leaders who are closer to the customer.

Executives are increasingly seeking answers to the corporate culture conundrum. We hope by defining culture properly and showing that changing it doesn’t have to be long-term or painful. And one doesn’t have to ban the word but rather it can be an entry point for a constructive and educational dialogue about corporate culture as a business enabler. Imagine what could have happened if we’d banned the words “artificial intelligence” when people didn’t understand that meant; maybe we wouldn’t have Siri!

Thanks Gerry, My biggest problem with “culture” is that it is too mysterious. Instead, I believe that culture is an outcome of many — overlapping, and ocassionally contradicting — managerial choices. Demystifying “culture” is a passion of mine. Thanks for your comment. Bill